Wolfson’s profits tumble

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Wolfson Microelectronics, the Edinburgh-based semiconductor company, reported a nearly 60 per cent fall in pre-tax first quarter profits on Wednesday, following disappointing sales of the portable music players and high-end phones that use its audio chips.

Wolfson, which provides audio chips for devices like the Apple iPod, warned late last year that a glut of unsold phones and music players left over from Christmas would keep sales slow at the start of 2007.

However, the company said on Wednesday there were signs of sales beginning to pick up again, and it expects to return to growth in the second quarter.

Sales of chips for portable music players, which account for about a quarter of the company’s revenues, were still down in the first quarter, but sales of chips for multimedia phones increased.

Wolfson is benefiting from a deepening relationship with Korean handset manufacturers Samsung and LG, which uses the Wolfson chips for its popular Chocolate phone.

“I feel like we are on track for the year. This is a good first step, “ said Dave Shrigley, the new chief executive of Wolfson, who took the helm at the company at the beginning of March.

Mr Shrigley expects revenues for second quarter to be in the range of $45m to $50m.

Revenues for the first quarter to the end of March fell from $45.9m to $40.2m, in line with consensus estimates, while pre-tax profits fell from $10.5m to $4.3m.

The fall in profit was accelerated by an extra $2.2m that Wolfson spent on increasing its research and development staff.

Earnings per share fell to 2.65 cents from 6.81 cents a year earlier.

Wolfson shares, which have lost 44 per cent of their value since last May, rose 1¾p to 316¼p in early trade.

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